Should You Co-Apply for a Bond on Property in White River?

Category Buyer Advice

Should You Co-Apply for a Bond on Property in White River?

If you cannot afford repayment of a bond on your own, consider co-applying for a mortgage. You may for instance, want to buy property in White River, priced slightly higher than what you can qualify for or for which you just cannot make the monthly instalments on your own.

What is the solution?

Co-applying for a bond when buying property in White River is a solution if you are two family members, willing to own shares in the purchased property. Indeed, this enables you to co-own the property in White River. It also means shared responsibility when it comes to monthly bond repayments.

Banks evaluate joint bond applications in the same way as with individual applications. The same assessment criteria for affordability and credit record apply. That said, the banks do consider the credit and income profile differences between the co-applicants.

What you will need to co-apply for a bond

 For your bond application, you will still need:

  • Good credit standing to qualify for a reasonable interest rate.
  • Both parties must qualify for the bond.

What are the risks?

Both parties must commit to repayment of the bond. If one party is unable to pay their part then the other has to step in to avoid foreclosure by the bank. It is thus imperative that both parties be committed and financially disciplined to ensure on-time monthly bond instalments. If one loses their income then the other has to step in to avoid late payment and thus a negative impact on their credit record.

You must make sure the objectives for buying the property in White River are the same. If your partner wants to sell the property or decides to pull out of the agreement, you will have to take over their bond payments or agree to sell the house. Taking over the bond payments will require a completely new bond application and credit assessment. There is thus the eminent risk of losing the property in White River simply because one party no longer wants to be part of the agreement.

It is essential to ensure life and disability cover is in place for all parties to the bond agreement. You do not want to lose your house or end up with a poor credit record because a member of the agreement loses their income related to injury or disability.

Also, consider what happens when one party passes away. To this end, life insurance is essential to ensure their part of the bond can be paid.  Keep in mind that both parties are jointly liable for the home loan.

What if the parties divorce?

Relationships can change and, for such, you need a contingency plan. If you get divorced, the following will happen:

  • If the property is held by one party, then that party must be able to afford the bond repayment.
  • If the party is unable to do so or does not qualify on their own, then the substitution for the other party cannot be allowed.
  • The property must then be sold, or another person must apply to be added to the bond as substitute.
  • In the latter case, the applicant must meet the credit record, income and affordability assessment of the bank.
  • Costs such as deeds office fees and legal costs will be payable.
  • The substituting party will have opportunity to negotiate for better interest rates and bond terms.

In conclusion

It can be risky to co-apply for a home loan, but if you are married and want to ensure affordability of the loan, it is an option to consider. Give us a call for more information about available properties in White River.

Disclaimer - Information is relevant at date of publishing (May 2019). The article is for general information purposes only and should not be seen as legal, realty or financial advice.

Author: Isebell Gauche

Submitted 06 May 19 / Views 23

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